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How Do Pay for Delete Letters Work? 

  • August 4, 2021

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People whose credit scores are far from perfect may be tempted to pay for correction of borrowing histories. Debt collectors may promise to make unfavorable information disappear if you pay the debt in question. This involves “pay to delete” letters, and it is not advisable. Discover the main reasons and recommended alternatives in our article.

Generally, you may not remove any valid information from your records. However, this workaround still exists as it falls into a gray area. By law, collectors have to share factual and complete data with the bureaus. If you are offered a paid deletion, think twice. Not only is this dubious, but it may also be completely ineffective.

The Key Principle

In 2021, this is a rare deal. In this scenario, a consumer contacts their debt collector in writing or by phone, offering to pay off the account for the sake of erasing it. If the institution accepts the deal, they remove the entry from the data they share with reporting agencies. Check this pay for delete letter template for details.

On the one hand, this is not falsification. Instead, the collector excludes a particular derogatory from the reported range. On the other hand, this is condemned by all nationwide bureaus. It is a vague ethical area.

Why It Is Irrelevant

The trick may have worked in the past, but it has little sense today, given the updated assessment systems. Paid accounts are simply ignored, so the deletion does not affect your status as a borrower. You can achieve better results through debt settlement — check the full guide. This is true for FICO 9 and VantageScore 3.0. 

The novel scoring systems remove paid accounts for you, so contacting the collectors makes zero sense. The account may stay on your records. However, provided that you meet your obligations fully, the damage is minimized. For consumers, paying the debt in question is enough without any dubious agreements.

Note that while the latest models disregard paid collections, this is not true for their predecessors. In 2021, some lenders may still use previous versions of the calculations. For example, FICO 8 factors in collections over $100. In addition, mortgage lenders tend to consider any such events.

For the derogatory to appear, your account must become delinquent (30 days past due). Any late payments initially reported by the original creditor remain. Commonly, collections are reported for seven years. After it is paid, it becomes a paid collection.

If the Information Is False

Sometimes, information related to collections is erroneous. It is one of the many possible errors in your credit reports. According to the official statistics, one in five Americans has incorrect borrowing histories. In this case, there are two methods to consider — DIY repair or professional services.

In either case, the false derogatory can only be removed by the bureau involved. For example, if your Experian report contains a collection account that does not belong to you or contains incorrect details, you need to send a dispute letter with evidence supporting your claim. Here are the key stages in the process.

  1. Collect Reports

You can get a free copy of your report from each of the three agencies — Experian, Equifax, and Transunion — once a week. Before the pandemic, it was only possible once a year. The frequency has been changed until April 20, 2022. Go to www.annualcreditreport.com to download the files. Note that all histories are compiled independently, so any of them may have disputable flaws. 

  1. Find Evidence

After identifying any flaws, including false collections, look for evidence. This includes bank statements and any other official documentation from the lenders and collection agencies. The bureaus do not remove any data without evidence.

  1. Open Disputes

Finally, send dispute letters to the bureau or bureaus that made the mistakes. This is a formal process — the Consumer Financial Protection Bureau even offers free templates. After receiving your letter (it is preferable to send it by certified mail with return receipt requested) the agency will have 30 days to conduct an internal investigation or 45 days in special cases. 

Eventually, it will determine if the account is verifiable and substantiated. If not, the information will vanish, and you will get a free copy of your corrected records. This procedure is possible thanks to the Fair Credit Reporting Act, which protects you from misinformation. The biggest drawback is that you have to monitor the documents for errors by yourself.

Professional Repair

If you do not have the time or desire to deal with official disputes, delegate this job to professionals. Credit repair agencies liaise with lenders, bureaus, and collectors to establish any accuracies on your records, including collections accounts. They open disputes on your behalf, while you monitor progress through an app or web portal. 

This is the most convenient way to have the mistakes corrected, provided that the firm is trustworthy. Check BBB ratings and feedback from customers on sites like Consumer Affairs to make an informed decision. Some firms have a money-back policy, which is a major advantage. 

The Bottom Line

Letters to collectors may have worked in the past, but the latest changes in assessment have rendered them irrelevant. This is a controversial legal area, as debt collectors agree to share incomplete information with the bureaus. Instead of resorting to shady methods, pay off your debts, correct any reporting errors and rebuild your history by becoming a more conscientious borrower.

 

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